U.S. Vice President JD Vance warned Russia that Washington could hit Moscow with sanctions if it does not agree to a good peace deal with Ukraine, while urging Europe to spend more on defence as he arrived for the Munich Security Conference.

Ukraine, and prospects for peace talks, preoccupied many at the high-profile global gathering after Donald Trump startled U.S. allies by calling Russian President Vladimir Putin and announcing the start of talks to end the war in Ukraine.

"We're going to talk, of course, about the Ukraine-Russia conflict and how to bring it to a negotiated settlement," Vance told reporters before meeting with NATO Secretary General Mark Rutte just ahead of the start of the conference.

Vance, who was due to meet Ukrainian President Volodymyr Zelenskiy later on Friday, said the U.S. could hit Moscow with sanctions and even military action if Putin refused a peace deal with Ukraine that guarantees Kyiv's long-term independence.

"There are economic tools of leverage, there are of course military tools of leverage" the U.S. could use against Putin, Vance said in an interview with the Wall Street Journal.

"There are any number of formulations, of configurations, but we do care about Ukraine having sovereign independence."

Trump's phone call with Putin stoked fears among European governments that they might be cut out of a settlement to end the war that could wind up being too favourable to Russia and undermine their own security.

German Foreign Minister Annalena Baerbock reiterated those concerns on Friday.

"A sham peace - over the heads of Ukrainians and Europeans - would gain nothing," she said. "A sham peace would not bring lasting security, neither for the people in Ukraine nor for us in Europe or the United States."

Russia now holds about 20% of Ukraine nearly three years after launching a full-scale invasion, saying Kyiv's pursuit of NATO and European Union ties posed an existential threat. Ukraine and the West call Russia's action an imperialist land grab.

Seated alongside Vance before the two held talks, NATO Secretary General Mark Rutte said they would discuss how "to get Ukraine to a place of maximum strength when the talks start".

There must be a “lasting peace (and Putin) can never try it again,” said Rutte.

PRESSURE ON EUROPE

Ahead of the Munich conference, an annual gathering of major political leaders, military officers and diplomats in the German city, Vance also reiterated Trump's demand that Europe do more to safeguard its own defence.

"We think a big part of that is ensuring that NATO does a little bit more burden-sharing in Europe, so the United States can focus on some of our challenges in East Asia," he told reporters, alluding to China.

NATO's Rutte said Vance was "absolutely right" about the need for Europe "stepping up" and doing more for its own defence. "We have to grow up in that sense and spend much more," Rutte said.

'END THE WAR'?

Trump said on Wednesday he had held a "highly productive phone call" with Putin and they had agreed to start negotiations immediately. He then briefed Zelenskiy on the call.

Zelenskiy has been publicly cordial about Trump's call with the Russian president but also warned world leaders against "trusting Putin’s claims of readiness to end the war".

His meeting with Vance and U.S. Secretary of State Marco Rubio, initially scheduled for the morning, was delayed to 5 p.m. (1600 GMT), a Ukrainian delegation source told Reuters.

Trump’s contact with Putin and his upbeat description of the conversation reversed years of U.S. policy under the Biden administration of treating the Russian leader as an international pariah since Russian forces swept into Ukraine.

U.S. Defense Secretary Pete Hegseth compounded the unease among U.S. allies by declaring that Ukraine would have to give up on war objectives such as a return to its borders before 2014, when Russia annexed Crimea, and NATO membership.

British Prime Minister Keir Starmer told Zelenskiy in a phone call that "Ukraine needed strong security guarantees, further lethal aid and a sovereign future, and it could count on the UK to step up, he added," Starmer's office said.

Trump said on Thursday U.S. and Russian officials would also meet in Munich on Friday and Ukraine was invited. But Kyiv said it did not expect to hold talks with Russia in the city.

No Russian officials were invited to the three-day conference but that would not prevent a meeting elsewhere in Munich. Russia's foreign ministry confirmed that no Russian officials would attend the conference.

Meanwhile, Ukraine has finished work on a draft minerals deal and handed it over to the U.S. for review, a source in the Ukrainian delegation at the Munich conference told Reuters.

As a senator, Vance expressed blunt scepticism about U.S. support for Ukraine.

Speaking on a podcast in 2022, he said: "I don't really care what happens in Ukraine one way or the other."